EZCORP Beats Estimates

EZCORP Inc. ( EZPW - Snapshot Report ) , the second largest operator of pawn stores in the United States, announced first quarter 2011 adjusted earnings of 69 cents per share, which surpassed the Zacks Consensus Estimate of 62 cents and soared 33% from year-ago quarter. GAAP earnings of the company rose 6% year over year to 55 cents. Results reflect the benefits of double-digit upside in top line.

The Austin, Texas based company’s total revenue jumped 18.0% year over year to $218.8 million, as same store sales grew 13%. As per segment, U.S. pawn operations sales spiked 16.4% to $160.8 million, Empeno Facil sales soared 113.4% to $12.4 million and EZMONEY operations revenue leaped 12% to $45.6 million.

Gross margin of the company improved 50 bps from the prior-year quarter to 37.9% and store operating income margin expanded 340 bps to 51.9%. Though operating expense of the company increased 10.9% to $64.5 million, operating income enhanced 1.3% to $39.4 million.

Store Update

The company continues to expand having opened 29 new stores in Mexico, Canada and United States during the quarter.

The company currently operates more than 1000 stores worldwide and in 2011 plans to open approximately 110 new stores, including 55 to 60 pawn stores in Mexico, 35 to 40 short-term consumer loan stores in Canada, and 10 pawn stores in the United States.

Financial Position

The company ended the quarter with cash and cash equivalent of $23.9 million, up from $17.0 million in the year-ago quarter. At the end of the first quarter, long-term debt was $12.5 million and stockholders' equity was $558.3 million.

Outlook

In 2011, EZCORP expects adjusted earnings of $2.40, up 22% year over year from $2.35 in 2010. The GAAP earnings guidance is projected at $2.26.

Our Take

The company reported better-than-expected results and we expect estimates to move up in the coming days. The Zacks Consensus Estimates for 2011 and 2012 are $2.35 and $2.74 respectively.

We have a Zacks #2 Rank (short-term Buy recommendation) on the stock. We also reiterate our long-term Neutral rating.

One of EZCORP’s primary competitors, World Acceptance Corp. ( WRLD - Snapshot Report ) , will announce its third quarter 2011 results on January 27, 2011.